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Citgo Petroleum Corporation
Location: Houston, Texas, United States Founder: Henry Latham Doherty Founded: 1910 Key People: Carlos E. Jordá (CEO) Employees: 3,400 More About The Manufacturer: The company traces its heritage back to the early 1900s and oil entrepreneur Henry Latham Doherty. After quickly climbing the ladder of success in the manufactured gas and electric utility world, Doherty in 1910 created Cities Service Company to supply gas and electricity to small public utilities. He began by acquiring gas-producing properties in the mid-continent and southwest. The company then developed a pipeline system, tapping dozens of gas pools. To make this gas available to consumers, Doherty moved to acquire distributing companies and tied them into a common source of supply. Cities Service became the first company in the mid-continent to use the slack demand period of summer to refill depleted fields near its market areas. Thus, gas could be conveniently and inexpensively withdrawn during peak demand times. In 1931, Cities Service completed the nation's first long-distance high pressure natural gas transportation system, a 24-inch pipeline 1,000 miles long from Amarillo, Texas to Chicago. A logical step in the company's program for finding and developing supplies of natural gas was its entry into the oil business. This move was marked by major discoveries at Augusta, Kansas, in 1914, and in El Dorado a year later. In 1928 a Cities Service subsidiary, Indian Territory Illuminating Oil Company, discovered the Oklahoma City field, one of the world's largest. Another participated in the discovery of the East Texas field, which, in its time, was the most sensational on the globe. Over three decades, the company sponsored the Cities Service Concerts on NBC radio. The long run of these musical broadcasts was heard on NBC from 1925 to 1956, encompassing a variety of vocalists and musicians. In 1944, it was retitled Highways in Melody, and later the series was known as The Cities Service Band of America. In 1964, the company moved its headquarters from Bartlesville, Oklahoma, to Tulsa. At the height of Cities Service's growth, Congress passed the Public Utility Holding Company Act of 1935, which forced the company to divest itself of either its utility operations or its oil and gas holdings. Cities Service elected to remain in the petroleum business. The first steps to liquidate investments in its public utilities were taken in 1943 and affected over 250 different utility corporations. At the same time, the government was nearing completion of a major refinery at Rose Bluff just outside Lake Charles, Louisiana, that would become the foundation of the company's manufacturing operation. Using designs developed by Cities Service and the Kellogg Co., the plant was dedicated only 18 months after groundbreaking. A month before Allied troops landed in France, it was turning out enough 100-octane aviation gasoline to fuel 1,000 daily bomber sorties from England to Germany. Government funding through the Defense Plant Corporation (DPC) also prompted Cities Service to build plants to manufacture butadiene, used to make synthetic rubber, and toluene, a fuel octane booster and solvent. In 1982, T. Boone Pickens, founder of Mesa Petroleum, offered to buy Cities Service Company. Citgo responded by offering to buy Mesa, which was the first use of what became known as the Pac-Man take-over defense; i.e., a counter-tender offer initiated by a takeover target. Cities Service also threatened to dissolve itself by incremental sales rather than being taken over by Mesa, stating that it believed that the pieces would sell for more than Pickens was offering for the whole. Cities Service Company located what they thought would be a "white knight" to give them a better deal and entered into a merger agreement with Gulf Oil Corporation. Late in the summer of 1982, Gulf Oil terminated the merger agreement claiming that Cities Service's reserve estimates were over-stated. Over fifteen years of litigation resulted. (For a more detailed discussion of the Cities Service vs. Gulf Oil litigation, see Gulf Oil#Demise.) Ironically, two years later, Gulf Oil itself would collapse as a result of a Pickens-initiated takeover attempt. In the chaos that ensued after Gulf Oil's termination of its deal, Cities Service eventually entered into a merger agreement with, and was acquired by, Occidental Petroleum Corporation—a deal that was closed in the fall of 1982. That same year, Cities Service Company transferred all of the assets of its Refining, Marketing and Transportation division (which comprised its refining and retail petroleum business) into the newly formed Citgo Petroleum Corporation subsidiary, to ease the divestiture of the division, which Occidental had no interest in retaining. Pursuant to an agreement entered into in 1982, Citgo and the Citgo and Cities Service brands were sold by Occidental in 1983 to Southland Corporation, original owners of the 7-Eleven chain of convenience stores. Fifty percent of Citgo was sold to Petróleos de Venezuela, S.A. (PDVSA) in 1986, which acquired the remainder in 1990, resulting in the current ownership structure. In September 2010, in connection with the centennial of its original owner, Cities Service Company, Citgo unveiled a new retail design. Within five years, Citgo planned for all locations to display the new street image. With full ownership of Citgo, PDVSA at its peak controlled 10% of the US domestic oil market, creating a lucrative export chain from Venezuelan soil to American consumers, as the two largest buyers of Venezuelan petroleum are the United States and China, respectively. In October 2010, then President of Venezuela, Hugo Chávez, announced the intention to have PDVSA sell its Citgo subsidiary calling it a "bad business" and citing low profits since 2006. The minimum sale price was set at 10 billion US dollars; however, PDVSA has been unable to find a buyer at that price. It was confirmed in January 2015 that Citgo would not be sold, but rather bonds were sold by Citgo to give a dividend to PDVSA. The Bonds sold included a $1.5bn five-year bond and a $1.3bn term loan to be fully repaid in three and a half years. In November 2017, six executives working for Citgo, including five American citizens, were arrested while attending a meeting at the headquarters of PDVSA in Caracas, and as of January 2019 remained in prison without consular access. Other Venezuelan oil executives were arrested in what was seen as a purge designed to bolster more economic power behind President of Venezuela, Nicolás Maduro, Asdrúbal Chávez, cousin of late Venezuelan president Hugo Chávez, was installed as president of Citgo in November 2017. For iRacing, Citgo is quite a popular paint scheme to choose for many NASCAR and full-body cars and is a true racing sponsor wherever they go. Category:North American Fuel Suppliers Category:American Fuel Suppliers Category:Fuel Suppliers